“No Deal is Free” - Trump & China Agree to 90 Day Tariff Pause
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Summary
On this episode of the Stock Market Movers podcast, Adam and Denny discuss the announcement of a 90 day trade pause between the United States and China, and their thoughts on who caved and who didn't.
Transcript
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I'm in Orlando yesterday, and we're at the hotel, and, you know, all of a sudden, boom,
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you know, we're getting news, news, news, here's what's going on, look at the market,
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look at the market's reacting, market gone up, you know, 1100 points, and S&P, and all
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the, Bitcoin crossed 100,000, oh my God, you know, it's going to be great, and then, you
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know, while this was announced that the trade's going to be made, it says, I retweet, I tweet
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and I say, I want to know the details, because I want to know what this is about, because
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on Sunday, we thought it was a trade deal, but it's a pause, so let me read this to you.
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U.S. and China agree to a 90-day tariff pause, so what does this mean, okay, on a 90-day
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The U.S. Trade Representative Jamie Greer and Treasury Secretary Scott Besson announced the
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U.S. agreed to drop its tariffs from 145% on Chinese goods by 115% to 3%.
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to 30 points, 30%, while China agreed to lower its rate on U.S. goods by the same amount
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to 10%, with Besson stating, the census from both delegations this weekend is neither side
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wants a decoupling, and that high tariffs are the equivalent of an embargo.
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China's Commerce Ministry said the two sides agreed to cancel 91% in tariffs on each other's
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goods and suspend another 24% in tariffs for 90 days, bringing the total reduction to 115%.
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Adding, the initiative aligns with the expectation of producers and consumers in both countries
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and serves the interests of both nations as well as the common interests of the world.
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Well, first of all, what have I always been saying, Denny?
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Tom, if you said anything with math, I was going to leave.
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No, the market goes up and down by sentiment, right?
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People get a little worried about the future, or they get optimistic about the future.
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And so the market jumped because it liked the fact that now costs will be not rising because
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And by the way, remember the Walmart study done by the Wall Street Journal?
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Well, 10,000 items at Walmart had not gone up in price for the American consumer.
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So when Rachel Maddow says, oh, the tariffs are hurting the American consumer for goods,
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tell her she's full of crap, just like you say to her when she says anything else.
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So the U.S. has apparently seen enough or heard enough that they're going to do it.
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And this is, they're going to put this pause in place to put something together.
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And what Scott Besson, he was saying the consensus from both delegation is neither side, you know,
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And so that's the right thing to say in front of the microphone.
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And it also means that Walmart and others that were holding the prices level and not
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raising them on the consumer, they're now going to get a little relief on their stock
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price because their costs won't be going up because they won't pay the tariff that they
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said they were going to pocket and just say, I'll eat it and put it out.
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This was good in the short term, good for the consumer in the short term, and good for
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Because they've been doing little things behind the scenes, such as I brought up the one that
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I finally found people talking about, the chemical that is in plastic that becomes ethylene that
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we talked about, we go ethylene, ethylene, I think it's called, and it gets processed and
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it makes ethylene, which leads to polyethylene, and that's plastic.
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And the Chinese dropped the tariff from like $145 to $0 because they said, yeah, we need
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I think, well, I think China caved, but I'll say I also think that we had seen the market
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moving and we saw the sentiment, and I think we put a little strategy into this as well
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China needs the United States, or does the United States need China?
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Well, if you look at it from a business perspective, in essence, who is the client, who is the customer,
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So, they need us more than we need them in terms of import-exports.
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That's why we all, these trade deficits that you hear, we haven't got a trade deficit with China and with Canada and Mexico because we're buying a lot of stuff.
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So, China is probably looking at U.S. being like, dude, they're going to stop buying from us.
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So, on one hand, China has way more control over their people.
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And as she has already warned their people, like, brace for impact, it could get bad.
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But at the same time, they don't want to crumble.
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They're saying, they're almost like staring at each other, having a staring contest.
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You know, we talked about on the live podcast, Trump needs some wins.
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This is happening way sooner than I anticipated.
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Because like we've been saying, we're not seeing what China's going through.
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What video have you seen of China and the way of life?
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Well, that's what I'm saying is I think they caved.
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And let's go from, go a few more paragraphs lower.
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Everyone talking about the destination of China.
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His original reciprocal tariffs announced April 2nd were meant to punish countries in proportion to their trade deficits.
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With the U.S., China at 34% got one of the highest major economies.
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Hitting Britain a stalwart ally with open markets with any tariff would have been unimaginable before this year.
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And yet it officially bears the same 10% reciprocal tariff as China, though it ran $12 billion deficit with the U.S. last year.
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While China ran a $295 billion surplus last year.
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So meaning we made money off U.K., we lost $300.
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With the deal with U.K., we made $12 billion more than they did.
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So true, China's 10% is on top of the 20% put in place a few months earlier, but that 20% is officially tied to China's role in the flow of fentanyl to U.S.
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Trump's officials say China has shown readiness to act on that problem, yet Canada and Mexico, who have already acted, are being hit with more at 25%.
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Another inconsistency, Trump promised to ratchet up tariffs further on countries that retaliate.
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China did, and Trump responded by eventually jacking his reciprocal tariff to $125.
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That wasn't because of concessions from China, but the mourning domestic costs.
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He backed off his reciprocal tariffs on most countries except China when the stock and bond market took fright and now has backed off of most of his tariffs in China amid warning of empty shelves, plunging container traffic, and small business failures.
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Dependence on China has long been flagged as a potential national security vulnerability for which tariffs can be justified,
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but that same dependence is what makes decoupling, no matter how mild, painful.
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Trump's walk back on tariffs shows there are limits on how much pain Americans are willing to take.
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So let's go look at something, what was happening behind the scenes.
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And if you could scroll down just below the picture of the two presidents and get to that paragraph that's just below it.
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Last week, Chinese officials granted exemptions.
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It was them talking to their own companies, apparently.
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And we're asking firms to identify critical goods they need levy-free.
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It was U.S. ethane because there was five of their top – right back there, right back there.
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Five of their top ten chemical companies says, we need this frickin' ethane from the U.S. so we can make plastic and stuff.
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And so China behind the scenes, I didn't think they caved, but they sure were putting a lot of exemptions out before it even happened.
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But I still don't trust them as far as I can throw them.
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I mean, look, I'm going back again, and I'm reading what's the book by Robert Hiltz – what's the book's name, Brandon?
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He was the one that was doing the trade deal on the first time with Trump.
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Changing course, taking on China, and helping America's workers.
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And going back and forth on how the trade deal took place with them, what did we want from this trade deal?
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Like, if you think about what is our concern with China?
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We wanted the world's dependency not to be on China, okay?
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We wanted them to not agree on certain things when it's coming down to intellectual properties that they're stealing and not agreeing to the terms, contracts.
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We wanted a few other things with them in regards to the tariffs where, you know, you're acting like, you know, that $300 billion, you know, what do you call it, the trade deficit that we have?
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I don't know if any of it's going to be made up.
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That $297 billion deficit is going to be still a $297 billion deficit.
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So what are we doing that they're buying from us as well in return?
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Again, this is why I said I want to know the terms.
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Because it's very easy sometimes to celebrate and see that you are so easily excited just because the market goes back up and your 401k went from $220 to $278, and you're comfortable now.
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Or your account went from $10 million to $11.6 million, and you're comfortable.
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I'm still concerned with the relationship with China.
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And I understand that they want to be respectful while they're negotiating and all this other stuff.
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I just hope this 90-day, what happened to Iran back in the days when under Trump, it was so close and Iran fallen, and there being a revolution because of the sanctions.
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He loses, Trump's out, Biden comes in, Iran's a free-for-all again, back to the same exact situation.
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I think the pain was very close to even a bigger deal getting done, but because of optics, we agreed to this, and I think in the next 90 days, the pain is going to go back to them being able to tolerate another 90 days or 180 days come 90 days from now.
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Go to June, July, August, August 8th, August 10th, let's just say, whatever, 11th.
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So August 11th, now we start negotiating hard again.
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They can go four more months, September, October, November, December.
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My opinion is the fact that the pain that you had to be able to make a bigger ask because of pure optics, hey, we need to show the market doing well.
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Yeah, but it's profit taking on the pop yesterday.
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And yeah, this number right here, top 10 countries with the biggest trade surplus.
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Okay, so you're looking at, and then go to India.
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Probably better terms when you negotiate with India.
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And they have a bigger control manufacturing around the world, China.
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They have a better, you know, structure, better system to be able to, you know, handle more business.
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But my biggest concern was the pain of negotiation is officially gone, and you're not going to have it come January 1st.
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There's a story in here that we did in Circle to talk about, and it says the fact that Trump's already eyeing midterms.
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If you looked at the tax deal that he did, I was reading the entire tax at the time.
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It's very interesting some of the things that they did here.
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But anyways, to just close this and go to the next story, Adam, you look like you wanted to say something about this.
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You know, Trump is cleaning up past presidents' mess.
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You know, who created this mess we have in China?
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I could argue that it's a lot of U.S. presidents, whether it was starting with Nixon opening up relationships with China, I believe, in the late 60s, early 70s.
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And then I think Jimmy Carter in the 70s officially recognized the CCP.
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Bill Clinton, I think, was the person that at least started them getting into the WTO, the World Trade Organization.
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And I think then it happened under George W. Bush.
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And then you had Barack Obama that didn't confront China at all, it would seem.
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So Trump is coming in and basically saying we're going to clean this mess up real quick.
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So the good, the bad, the ugly, I think we're about to find out.
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But if you look at small businesses, here's this article from The Wall Street Journal, how tariffs are crushing small businesses.
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They're basically saying that the Chamber of Commerce has requested tariff exemptions for small businesses.
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Small businesses are apparently closing or expect to shut down from a lack of support.
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But if you look on Main Street, Brandon, if you pull up the fear-greed index that I text you.
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So this is the first time I texted you, Brandon.
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This is the first time that I've seen the fear-greed index indicate a little bit more greed.
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A month ago, fear was the resounding narrative in the markets right now.
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If you scroll down, Elon Musk will like that number.
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If you scroll down, you could see that I think it was the lowest I'd almost ever seen on the fear.
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You know, 1 to 50 is on the fear side, and then 51 to 100 is on the greed side.
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So Americans are basically saying, you know what?
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But for what it's all worth, and I understand, and Pat, my thing is with China, just with anything,
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something I feel personally something's going to be happening here because these guys are not going to go quiet.
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And, like, what is going to be their next thing?
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If anybody, it doesn't just have to be China, something, they need to do something to try to cripple us.
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Because just this weekend, I mean, how much winning did we do this weekend?
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In 48 hours, he got the hostage, you know, pharma, this deal, 90-day pause.
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I mean, how much more stuff can he do to make himself look good?
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Remember a week ago, everybody was losing their minds.
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Now everybody in CNN and everybody in mainstream media is changing their tune because now they have to give him credit.
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Do you think China is capable of doing something insane?
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But that doesn't mean we got what we wanted because now you gave them a lifeline.
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We just gave them an additional seven months that they can tolerate pain.
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They don't care about their people like America does.
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So to them, that's my only, again, not in the inside.
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If I have to bank on anybody negotiating on our behalf, it's Trump and his people.
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I'm very confident with what they're capable of doing.
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All I'm saying is, I don't know if this 90-day is going to get us back to some of the stuff
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that Nixon, Clinton, some of these other guys did in the past.
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You can't let just the market going up fool you that the right things were done.
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And I'm a guy that is supportive of who this guy is.
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And guess what's going to happen next 30 years?
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I do not want them to get any stronger than they are right now.
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I don't trust their, you know, they say you want to test a man's character, give him what?
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So to me, the kicking the can because you just want a good midterms or you want good
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news going into Saudi, who gives a shit what the market's going to be saying and what the
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Anyways, I know you guys would have never thought I was going to say something like this, but
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There needs to be less reliance on China and jobs in America.
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We need jobs in America, American-made products and American-made suppliers, and we need less
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Well, we got there a little bit with India, which has been a long time coming, like Apple's
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Now we got to get to suppliers in America, jobs in America, and less reliance on China,
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I'm just staying a little bit paranoid because they destroyed the world for a year and a
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Listen, you know how I feel about business owners.
00:19:16.220
To me, I have a very special place in my heart for business owners because I know how
00:19:21.120
Yesterday for me was an 18-hour day, and I loved it.
00:19:26.240
We had a private jet that we're trying to get on a flight to come back from Orlando and
00:19:31.680
The weather hits, and we can, so we rent a used Dodge Ram and a whatever the other Kia
00:19:42.120
We're just on the phone talking to a bunch of different people, and then we get back
00:19:53.640
Their 401ks, their savings, their mortgage, the money that they have in a property.
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China destroyed tens of thousands of restaurants in America, hundreds of thousands of businesses
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These policies in America done by guys like Fauci and others, and then what those guys
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did from China to disrupt the entire world, and you want me to be able to, now I'm going
00:20:31.220
And all I'm going to say is, I just want to make sure in the future you never do anything
00:20:48.100
China flu, ladies and gentlemen, whatever, bro.
00:20:55.300
I'm hoping I'm wrong, and I'm hoping all the trade deals and everything that's being
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